How Mistry was sacked

Ratan Tata offered Cyrus Mistry a choice to remain on the Tata Sons board as a nonexecutive director on the day he was removed as its chairmanDevina Sengupta | ET Bureau | Updated: December 22, 2016, 10:03 IST

Ratan Tata offered Cyrus Mistry a choice to remain on the Tata Sons board as a nonexecutive director on the day he was removed as its chairman, according to Mistry's petition to the National Company Law Tribunal.

Mistry, whose family owns an 18.5% stake in the Tata Group holding company, said he would continue on the board.

To a question by director Ishaat Hussain at the October 24 board meeting about his remai ning as the chairman of other Tata companies, Mistry said he would decide on it and in form the board, even as Ratan Tata said the decision, to a great extent, would be Mistry's preroga tive, the petition says.

The petition accuses Tata Sons and its bo ard, including inte rim chairman Ratan Tata, of oppressing the interests of mi nority sharehol ders and misma nagement. The first hearing of it is scheduled for Thursday.

“Ratan Tata had mentioned that they need to recognise the work done by Mistry in the last four years and it was important for the group to move forward in as seamless manner as one can,“ the petition says, citing the proceedings at the board meeting.

According to the minutes filed of the board meeting, a copy of which was filed with the petition, Mistry was informed before the meeting that Ratan Tata would join them. Nitin Nohria, the Harvard Business School dean who is one of the directors, said Tata Trusts had asked their nominees to bring a motion to the board. The Trusts hold two-thirds of Tata Sons.

At the meeting, Amit Chandra said a meeting of Tata Trusts on the same day had resolved that Mistry should step down. The reason given was that the Trusts had lost confidence in him for a variety of reasons. Mistry contested the resolution and Chandra asked him to reconsider his decision not to step down.

According to the minutes logged, Ratan Tata turned down Mistry's request to speak a few words, saying Mistry was “an observer at this stage“. The scion of the Shapoorji Pallonji group sought 15 days to consider legal options, even as he was told that the resolution was vetted by lawyers. The meeting was chaired by Vijay Singh, a former bureaucrat and a Trusts nominee on the board.

The resolutions brought to force included replacement of Mistry, appointment of Ratan Tata as an additional director and interim chairman, and appointment of a new nomination and remuneration committee which included Ronen Sen, Ajay Piramal, Venu Srinivasan, Farida Khambata and Vijay Singh.

Some of the other resolutions included a change in the retirement age of directors and creation of a panel to search for a new chairman.

Nohria proposed the dismissal of Mistry and Piramal seconded it. Khambata abstained from the voting, but all other directors besides Mistry voted in favour of the resolution. Mistry raised objections to all resolutions brought forth that day.